Daimler weakens despite strong 2015 performance

The automotive sector is often a sign of the health of the overall economy. When times are hard, consumers hold back on buying a new car. When times are good, industrial buyers invest in transportation.

Daimler has just reported 2015 revenues up 15 per cent and operating earning up more than 25 per cent.

There was strong growth in its Mercedes brand, which took market share from BMW and Audi and “defied the slowdown in China”.

But for all the success of its cars unit, Daimler’s truck and bus divisions are still struggling in certain markets, including South America.

It seems there is still money to spend in luxury markets but the wider economy is less certain.

For 2016 Daimler is forecasting growth, but slower than in 2015. But fourth-quarter performance disappointed analysts and the company’s spending plans mean the “significantly” lower free cash flow in 2016.

With these uncertainties, and despite the company’s highest ever dividend in 2015, shares fell three per cent on the announcements.